In simple terms, an ad pod refers to a block of multiple ads within a single ad break, delivered through a single ad request. In the past, each ad was marketed individually, i.e. if there were 3 spots in an ad block, each spot was marketed one by one. Adpods break with this concept by selling the totality of the ad break in which different spots will be placed. By delivering multiple ads through a single call rather than through a combination of standalone ads, viewer engagement and monetization potential are maximized.

The concept of ad pods mirrors traditional TV ad breaks, but with much more flexibility and the ability to serve targeted ads based on audience data. This innovation is paving the way for more strategic, high-value advertising opportunities for streaming platforms.

Ad pods open up a range of advanced monetization strategies that allow streaming platforms to extract more value from their audiences. Here are some of the key strategies:

1.   Price Differentiation

pods allow platforms to apply a strategic pricing model, with some positions in the pod commanding higher rates than others. For example, the first position in an ad pod often receives the most visibility and attention from viewers, making it a prime spot for high-value advertisers. Streaming platforms can capitalize on this by charging a premium for these top-tier ad spots, while other positions in the same pod may be priced more affordably.

Ad pods can be marketed entirely, then the DSP will be in charge of building the chain of spots that will be delivered in an ad break.

2.   Exclusivity

Ad pods offer platforms the ability to offer exclusivity within an ad break. By preventing direct competitors from appearing in the same pod, platforms can increase the value of ads, as advertisers are often willing to pay more for exclusive pods. This ensures their message isn’t diluted by competing products or services.

3.   Programmatic and Direct-Sold Hybrid Models

One of the most powerful aspects of ad pods is their ability to combine programmatic and direct-sold advertising. This hybrid approach maximizes the value of ad inventory, increasing the fill rate of inventory while optimizing the average CPM.

4.   Variable Ad Lengths and CPM Optimization

Ad pods provide streaming platforms with significant flexibility regarding ad duration. Platforms can incorporate both short-form and long-form ads within the same pod, catering to a wide array of advertiser needs. This flexibility is key for maximizing monetization opportunities, as platforms can mix and match ad lengths to fit both viewer preferences and advertiser goals.

The potential of ad pods is further enhanced with the introduction of CPM per second optimization via Open RTB 2.6. This advanced feature allows streaming platforms to sell ad inventory in a more granular, dynamic way, optimizing the cost per thousand impressions (CPM) based on the precise duration of each ad.

With the rise of programmatic advertising, Open RTB 2.6 introduced the concept of CPM by second, which enables platforms to price ads based on their length in a more precise manner. Rather than applying a fixed CPM rate to an entire ad pod, platforms can adjust pricing according to the actual duration of each ad within the pod, thereby enhancing their ability to maximize revenue.

This method allows for smarter pricing of ad space, particularly for platforms that feature a combination of short and long-form ads within a pod.

With CPM optimization by second, platforms can not only sell ad space more efficiently but also fine-tune their pricing strategy. This becomes especially relevant in a programmatic advertising context, where real-time bidding allows for immediate adjustments based on demand and ad availability. The combination of ad length flexibility and CPM per second optimization provides platforms with a sophisticated way to optimize their ad inventory, helping to fill ad pods with the right balance of short and long ads that maximize both revenue per impression and viewer engagement.

In short, the ability to optimize CPM per second, introduced by Open RTB 2.6, adds a new layer of sophistication to the monetization of ad pods. By allowing streaming platforms to dynamically adjust pricing based on ad duration, it ensures that every second of advertising is monetized to its fullest potential, increasing the overall effectiveness of ad pods as a revenue-generating tool.

While ad pods have certainly gained traction in the streaming space, they have not yet been fully implemented across all CTV inventory. The technology needed to support ad pods, especially when combined with real-time bidding and programmatic platforms, can be complex and costly. Moreover, the advertising ecosystem is still evolving, and there’s a need for more standardized approaches to ad pod implementation, especially in the context of RTB 2.6 and cross-platform integrations. Fragmentation in the ad tech space can sometimes slow down the adoption of new technologies.

Ad pods are undeniably revolutionizing the way streaming platforms monetize their content. By offering a more efficient, targeted, and flexible advertising model, ad pods allow content owners to increase revenue while improving the viewer experience. As the industry continues to embrace programmatic advertising, real-time bidding, and advanced targeting, ad pods will play an increasingly pivotal role in streaming platforms’ monetization strategies. While challenges remain, the ongoing evolution of ad pods signals a bright future for ad-supported streaming, where both advertisers and content owners can thrive in an increasingly competitive digital landscape.